Vestar’s return on Sun Products more than twice its investment

Vestar Capital Partners expects to more than double its money with the sale of Sun Products Corp to Henkel AG, according to a source familiar with the transaction.

On Friday, Henkel said it agreed to buy Sun Products, whose brands include All, Wisk, Surf and Snuggle, for $3.6 billion. Vestar, the New York private equity firm, is the seller.

Sun Products is the Wilton, Connecticut, provider of laundry detergent, fabric softeners and other household products. The company, employing about 2,000, posted $1.6 billion in U.S. and Canada sales for 2015.

Sun is the combination of two companies. In 2007, Vestar Capital acquired Huish Detergents in a deal valued at $1 billion, the source said. A year later Vestar bought Unilever’s U.S. brands for $1.45 billion.

The private equity firm invested a total of $450 million — $300 million in 2007 and $150 million in 2008 — into Sun, the source said. Vestar did not receive any dividends from Sun in the intervening nine years, the source said. The PE firm stands to make more than 2x its money on the sale of Sun to Henkel, the source said.

Founded in 1988, Vestar invests in consumer and healthcare, as well as business and financial services.

The PE firm used its fifth fund to invest in Sun Products. Vestar Capital Partners V LP, which closed at $3.7 billion in 2005, is still invested in companies including StayWell, Healthgrades, Press Ganey, Civitas and Triton Container.

The fifth fund was generating a 2.96 percent net IRR and 1.2x total value multiple as of Dec. 31, according to performance data from Washington State Investment Board.

In 2013, Vestar’s sixth fund collected $804 million. Vestar’s sixth pool was producing a net IRR of 29.33 percent and a 1.4x total value multiple, WSIB said

Vestar’s sixth fund is 50 percent invested, the source said. The firm may begin fundraising for its seventh fund next year, the person said.

Morgan Stanley & Co advised Sun Products while Kirkland & Ellis LLP was legal adviser.

A Vestar spokeswoman declined comment.

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Photo of sold sign courtesy ©iStock/JohnnyH5